Politics, Economics, and Life...from a conservative and libertarian perspective

Monday, September 30, 2013

1987: the Shutdown of discontent(ment)

With a government shutdown now looming over the implementation of Obamacare, there has been a lot of talk about the nature of Federal Government shutdowns, what it means, and the history of the same. Witness this lengthy--and mostly complete--history of Federal shutdowns at Wonkblog. Starting with the 1976 shutdown initiated by Ford's veto of a spending bill for HEW (the Departments of Health, Education, and Welfare), and concluding with the huge budget-induced shutdown under Clinton from December 5, 1995 to January 6, 1996, it details a total of seventeen--that's right, seventeen--shutdowns in a twenty year period.

No matter what any politician or pundit might say now, the reality is that the nation and the Federal Government survived all of these shutdowns with relative ease. None were the harbingers of doom that many portrayed them to be. And if another shutdown happens tomorrow, it will not spell the end of the government, of democracy, of freedom, or of anything like that. This isn't to say it won't have significant consequences, for it most certainly will. But those consequences will be short-lived, by and large. The only potential long-term ones revolve around the implementation of Obamacare. And given that this is not an election year, the short-term ones--if the shutdown happens--will not have the huge political repercussions many are imagining. We--as a nation--simply don't have memories that long.

And with regard to those memories, let's take a closer look at one of the previous shutdowns, the one day shutdown that occurred in December of 1987. The Wonkblog article describes it thusly:

Shutdown #14: I Think You're a Contra

When did it take place? Dec. 18-20, 1987How long did it last? 1 dayWho was president? Ronald ReaganWho controlled the Senate? Democrats, 54-46; Robert Byrd was majority leaderWho controlled the House? Democrats, 258-177; Jim Wright was speakerWhy did it happen? Reagan and congressional Democrats could not agree on funding for the Nicaraguan "Contra" militants in time to avoid a shutdown. Additionally, Democrats pushed for a provision reinstating the "Fairness Doctrine," which required that broadcasters give equal airing to both sides in political disputes, and which the FCC had recently stopped enforcing at the time.What resolved it? Democrats yielded on the Fairness Doctrine, and a deal was worked out wherein nonlethal aid was provided to the Contras.

A fair summary, but a little more depth is required to get a full picture.

The issue of funding for the Contra rebels was a product of a great deal of haggling and was in fact still on the table--as the specifics here show--even after the Iran-Contra affair had been exposed (Reagan had created the Tower Commission to look into the affair a year before, in late November of 1986). This is worth noting because at the time, there was general support in Congress for continued assistance to the Contra rebels. There was disagreement over the form and size that assistance should take. Now, more than twenty-five years later, many Democrats and others on the left would tell a markedly different tale about the U.S. funding of Contras, a tale that doesn't mesh with the reality of Congressional actions or votes.

Nonetheless, this disagreement over the nature and size of the support the Contras should receive was a major issue in the moment. After all, it led to a shutdown of the Federal Government.
But let's keep this in very clear perspective. To do that, we need to cast our nets a bit wider: in October of 1987, stock markets around the world suffered major collapses. The DOW dropped over five hundred points, a decrease of more than 20%. Its collapse followed similar ones in Hong Kong, Oceania, and Europe. In response to this shock to the economy, the President and Congress agreed to undertake a major effort to lower the deficit. That's right, a U.S. Congress under Democratic control agreed that lowering the deficit was a sound response to the economic problems of the time. At issue, of course, was just how big the cuts were going to be. Reagan wanted more than Congress was willing to give. But in the end, they agreed to a plan (a plan that Congress would later methodically ignore, but that's a different discussion):

That agreement, a response to the Oct. 19 stock market collapse, sketched a plan to cut $30 billion from this year's projected $180-billion deficit, leaving a shortfall about equal to the $148 billion recorded for the fiscal year that ended Sept. 30. Over two years, it would reduce the deficit by $76 billion.

Can you imagine a deficit of only $180 billion, especially after four years of trillion dollar deficits? But the point here, again, is that most everyone agreed on the necessity of "belt-tightening" by the Federal Government. The Democrats were nowhere close to going to war with the President on this issue. They knew overall spending was out of control and had to be brought down (incidentally, if one wants to trace the history of how Clinton actually achieved zero deficit years, that history starts right here) and their constituents were screaming at them to do so.

Instead, they went to war with Reagan over the issue of funding the Contras. Not whether or not to fund them, mind you, but how much to fund them, after Reagan agreed that the new funding wouldn't include arms shipments and the like. Reagan wanted twice the amount he ended up accepting. And what kind of numbers are we talking about here? It may surprise you:

In the end, it appears that Reagan will get only half of the roughly $16-million Senate package that he had said was the minimum he would accept. The package tentatively agreed on Saturday night would provide the Contras with $3.6 million in supplies such as food, clothing and medicine--enough, it is estimated, to last them through the end of February. When the cost of transporting the goods is added, the package totals about $8 million.

See, Reagan accepted the non-military aid right away. He compromised on the issue. But the Democrats in the House were not satisfied. They basically allowed the Federal Government to shutdown in order to lower the Contra aid package by 50%, from $16 million to $8 million.

The other issue involved here--the Fairness Doctrine--was something of a gambit on the part of the Democrats. The Reagan Administration had already revoked the rule (it was an FCC policy, not an actual law) and a previous attempt by the Democrats--in June of 1987--had already been vetoed by Reagan and the leadership in Congress knew they didn't have the votes to override the veto. So they tried an end-run. They tacked the legislation on to this very much needed appropriations bill, hoping that Reagan would let it slide.

But Reagan never had any intention of allowing a revival of the Fairness Doctrine. It was his deal-breaker, for he (rightly) considered it anything but fair and a clear violation of the ideas of both limited government and free speech.

To sum up, Congressional Democrats thought $16 million was too high a number for aid to the Contras, but felt $8 million was just fine. Reagan felt the Fairness Doctrine was profoundly wrong, a violation of the nation's founding principles. This is why the government shut down for one day in December of 1987, because Reagan stood on principle and the Democrats stood on mud.

So when you hear people (Democrats) talk about how the Republicans are acting like children, how this potential shutdown is just so unprecedented, how Democrats would never and have never behaved similarly, look back to 1987. Of course, the big difference then--as opposed to now--is that there was an actual adult with actual leadership ability sitting in the Oval Office.